Frequently Asked Buyer Short Sale Questions

1. Q) What is a residential short sale?

 A) A residential short sale is a sale of residential property (single family residence, duplex, triplex, fourplex) in which the contract sales price is less than the amount that the seller still owes on the property.

 

2. Q) How long does it take to complete a short sale?

 A) There is a great deal of variation in timeframes. No two short sales are alike. Some short sales can be completed in 75 to 90 days; others may take 5 to 8 months.

 

3. Q) What factors determine how long a short sale will take?

 A) The factors that affect timelines include, but are not limited to, the following:

• Volume of files being processed by the seller’s lender. As a general rule, the higher the volume the longer the processing time.

• Number of liens. Short sales in which there is only one lien (1st mortgage) take less time to process than short sales in which there are more than one lien holder; the more lien holders there are, the more time it will take for processing.

• Mortgage Insurance. In addition to lien holders, there can also be a Mortgage Insurance company or two involved. This too will add to the time it takes to process the short sale.

• Accuracy, completeness, and legibility of the short sale package that is submitted by the listing agent.

• Experience and skill level of the listing agent.

 

4. Q) If the seller accepts my offer, does his lender have to accept it also?

 A) No. All short sales are subject to final approval by the seller’s lien holder(s). This can include not only the 1st mortgage lien holder, but also all junior lien holders and mortgage insurance provider(s)

 

5. Q) Will I have the opportunity to have an inspection done?

 A) Yes, this is allowed and advised.

 

6. Q) What if the inspector finds problems? Will the seller or his lender make repairs that are needed?

 A) Normally residential short sale listings specify that the property is being offered AS IS. Occasionally sellers will make minor repairs, but this is the exception rather than the rule. The same applies to the lender. One alternative if your inspection uncovers problems is to adjust your offer after the inspection to compensate for repairs that you will need to make if you go through with the transaction. Sometimes, for example, if repairs must be completed in order for a buyer’s lender to approve financing, seller’s lender will make concessions in order to facilitate repairs.

 

7. Q) What are the advantages of a short sale? Why not just look for traditional listings or foreclosed properties?

 A) Each market is different. But in most markets today, anywhere from 10% to 75% of the properties for sale are short sales. If you steer clear of short sales, you are missing a significant number of potential opportunities. Short sales can often be purchased at below market value; this is much less likely when making an offer on a property that is not distressed. Compared to foreclosed properties, short sale properties tend to be in better condition. Further, when you purchase a short sale you receive a full seller disclosure; when you purchase a foreclosed property, banks are exempt from having to provide seller disclosures.

 

8. Q) If I make a cash offer on a short sale will the bank process it faster than if I finance the purchase?

 A) No. Whether it is your cash or your lender’s cash, the seller’s lien holders will receive cash in the end. Some short sale lien holders look at cash offers suspiciously. They will review the offer to make sure that it is not a lowball offer made by an investor for the purpose of flipping the property.

 

9. Q) Should I keep looking after I make an offer on a short sale? Would it be smart to make shotgun offers to be sure that at least one gets approved?

 A) Lien holders and listing agents are taking steps to prevent this practice. It is best to find a house that you want and commit to it.

Need Help with REAL ESTATE IN: Anne Arundel County, Howard County, Queen Anne County, Baltimore County, Harford County, Annapolis, Arnold, Crofton, Crownsville, Davidsonville, Eastport, Edgewater, Fort Meade, Gambrills, Glen Burnie, Hanover, Linthicum Heights, Millersville, Mitchellville, Odenton, Pasadena, Piney Orchard, Severn, Severna Park, Columbia, Ellicott City, Clarksville, Kent Island, Bel Air, Bowie, Brooklyn Park, Catonsville, Curtis Bay, Dundalk, Elkridge, Essex, Farmington Village, Gibson Island, Grasonville, Halethorpe, Harmans, Laurel, Lutherville, Timonium, Parkville, Perry Hall, Piney Orchard, Queenstown, Riva, Shipley’s Choice, Stevensville, Tracy’s Landing, West River, White Marsh, Middle River, Towson & Abington.

 

Maryland Short Sale Information, Frequently Asked Buyer Short Sale Questions

1. Q) What is a residential short sale?

 A) A residential short sale is a sale of residential property (single family residence, duplex, triplex, fourplex) in which the contract sales price is less than the amount that the seller still owes on the property.

 

2. Q) How long does it take to complete a short sale?

 A) There is a great deal of variation in timeframes. No two short sales are alike. Some short sales can be completed in 75 to 90 days; others may take 5 to 8 months.

 

3. Q) What factors determine how long a short sale will take?

 A) The factors that affect timelines include, but are not limited to, the following:

• Volume of files being processed by the seller’s lender. As a general rule, the higher the volume the longer the processing time.

• Number of liens. Short sales in which there is only one lien (1st mortgage) take less time to process than short sales in which there are more than one lien holder; the more lien holders there are, the more time it will take for processing.

• Mortgage Insurance. In addition to lien holders, there can also be a Mortgage Insurance company or two involved. This too will add to the time it takes to process the short sale.

• Accuracy, completeness, and legibility of the short sale package that is submitted by the listing agent.

• Experience and skill level of the listing agent.

 

4. Q) If the seller accepts my offer, does his lender have to accept it also?

 A) No. All short sales are subject to final approval by the seller’s lien holder(s). This can include not only the 1st mortgage lien holder, but also all junior lien holders and mortgage insurance provider(s)

 

5. Q) Will I have the opportunity to have an inspection done?

 A) Yes, this is allowed and advised.

 

6. Q) What if the inspector finds problems? Will the seller or his lender make repairs that are needed?

 A) Normally residential short sale listings specify that the property is being offered AS IS. Occasionally sellers will make minor repairs, but this is the exception rather than the rule. The same applies to the lender. One alternative if your inspection uncovers problems is to adjust your offer after the inspection to compensate

for repairs that you will need to make if you go through with the transaction. Sometimes, for example, if repairs must be completed in order for a buyer’s lender to approve financing, seller’s lender will make concessions in order to facilitate repairs.

 

7. Q) What are the advantages of a short sale? Why not just look for traditional listings or foreclosed properties?

 A) Each market is different. But in most markets today, anywhere from 10% to 75% of the properties for sale are short sales. If you steer clear of short sales, you are missing a significant number of potential opportunities. Short sales can often be purchased at below market value; this is much less likely when making an offer on a property that is not distressed. Compared to foreclosed properties, short sale properties tend to be in better condition. Further, when you purchase a short sale you receive a full seller disclosure; when you purchase a foreclosed property, banks are exempt from having to provide seller disclosures.

 

8. Q) If I make a cash offer on a short sale will the bank process it faster than if I finance the purchase?

 A) No. Whether it is your cash or your lender’s cash, the seller’s lien holders will receive cash in the end. Some short sale lien holders look at cash offers suspiciously. They will review the offer to make sure that it is not a lowball offer made by an investor for the purpose of flipping the property.

 

9. Q) Should I keep looking after I make an offer on a short sale? Would it be smart to make shotgun offers to be sure that at least one gets approved?

 A) Lien holders and listing agents are taking steps to prevent this practice. It is best to find a house that you want and commit to it.

If you are thinking about BUYING or SELLING a Property in : : Anne Arundel County, Howard County, Queen Anne County, Baltimore County, Harford County, Annapolis, Arnold, Crofton, Crownsville, Davidsonville, Eastport, Edgewater, Fort Meade, Gambrills, Glen Burnie, Hanover, Linthicum Heights, Millersville, Mitchellville, Odenton, Pasadena, Piney Orchard, Severn, Severna Park, Columbia, Ellicott City, Clarksville, Kent Island, Bel Air, Bowie, Brooklyn Park, Catonsville, Curtis Bay, Dundalk, Elkridge, Essex, Farmington Village, Gibson Island, Grasonville, Halethorpe, Harmans, Laurel, Lutherville, Timonium, Parkville, Perry Hall, Piney Orchard, Queenstown, Riva, Shipley’s Choice, Stevensville, Tracy’s Landing, West River, White Marsh, Middle River, Towson & Abington.

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